Expat financial advice in Azerbaijan

As an expat in Azerbaijan, it is important to understand your financial options, including the various risks about rogue financial advisors targetting expats. This article looks at some of the options available and what to look out for to ensure you don't end up getting stung.

Written on 8 January 2019

Azerbaijan offers many expatriates the opportunity of higher earnings and lower tax exposure.

Many expats in Azerbaijan and specifically Baku, work in oil and gas and receive other generous benefits that mean lower outgoings as well as higher net income. For many professionals this represents an opportunity to build real financial security for themselves and their family, clear borrowings earlier and even retire earlier than they otherwise might be able to.

Engaging with a professional financial planner can ensure that the benefits of this opportunity are maximized. However, always ensure that you are dealing with a professional, fee-based adviser rather than the more common ‘product sellers’ that thrive on high commissions.

A professional, fee-based adviser will be able to provide very transparent solutions to wealth management, savings for future needs and retirement planning solutions. These solutions should not have any contractual term, with your assets remaining 100% liquid at all times (which means there are no nasty surprises on the way out).

The importance of future proofing financial decisions

Many expats who are based in Azerbaijan will also relocate to various locations in their career. This is where it is important to have solutions that are not just locally available but globally portable, still suiting your needs wherever you move to in future.

Be cautious of bad financial advice

The number of expats that are being taken advantage of by unscrupulous, unregulated financial advisors is much higher than in highly regulated countries such as the UK or the US.

This is due to the lack of international regulations and while the UK’s FCA offer some protection around pension transfers, anybody making any financial, investment or pension decision should always be completely aware of the full fee structure (including commissions and potential future exit charges), tie in periods for investments and the underlying investments themselves.

Before signing anything, ensure that you have completed a risk assessment with any advisor and that you receive a full report that explains exactly what has been advised and if anything is unclear, do not sign until you are completely confident that you fully understand your investments.

The typical approach of such unscrupulous advisors is to trawl LinkedIn and company directories and contact individuals out of the blue making bold claims that may or may not be true. For example, some advisors are using Brexit as a reason for people to make quick decisions given the restrictive timeline.

The simple rule to follow is that you should always question anybody that has made contact with you out of the blue about your pensions or investments. While there may be good financial opportunities out there, it is important that you are not sold financial products that are not suitable for you, and only suitable for the advisor’s pockets.

The risk with tax-free investment options

Many expatriates are sold products from the Channel Islands on the basis that they are tax free. While jurisdictions like these are useful, it does not follow that a 25-year savings plan or a portfolio bond with long-term exit charges is a good solution because growth is hampered by the high underlying cost of these vehicles, derived mainly from the investor needing to repay the high upfront commission that was paid to the broker at outset.

UK investment platform options

Depending on your situation, you may be able to significantly reduce your costs through investment platforms, while also offering additional tax planning benefits and therefore, better investor outcomes. The benefit of considering a UK investment platform is that investors returning to the UK will have good tax planning benefits including personal capital gains tax allowances, ISA allowances low-cost portfolio bond wrappers that can be used. Of course, capital gains can also be realised before returning to the UK and this type of planning can be tailored to the individual(s).

Request a free consultation

If you would like independent advice about your financial situation, investments or pensions we can help. Enter your details using the form to request a free introductory consultation with an independent, fee-based adviser that will also be able to assist with other important areas of planning such as offshore banking (multi-currency), Wills and Estate Planning, Family Protection and repatriation advice.

Once your received, we will review your details and the select the most suitable advisor from our network who we will then ask to contact you directly to arrange a time for your free consultation.

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